2H23 Outlook
The author is an analyst at NH Investment & Securities. He can be reached at dongyang.kim@nhqv.com -- Ed.
In 2022, the NPS set aside 43.1% of its assets for responsible investment. At the NPS, responsible investment has become a key consideration for investment in a range of assets, including domestic stocks (100%)/bonds and overseas stocks/bonds. AUM for publicly-placed domestic equity ESG funds has held steady at W2tn. But, responsible investment is expected to pick up again, backed by ESG advancement (eg, increased responsible investment portion at the NPS, stewardship code revision, and the spread of shareholder activism).
Holding companies have long been undervalued, with discount to NAV remaining high. We expect holding companies that engage in treasury stock acquisition/cancellation, present concrete dividend policies, and plan large-scale IPOs to show differentiated valuations.
We present LS Holdings and Doosan Corp as our preferred picks. For LS Holdings, we note cash flow expansion following acquisition of stake in LS MnM, hopes towards IPO, a jump in earnings momentum from equipment expansion at subsidiaries, and a rise in rechargeable battery-related value. For Doosan Corp, we draw attention to its full-fledged nuclear power plant (NPP) orders, business condition improvement for a listed subsidiary thanks to a recovery of the North American manufacturing industry, a rise in NAV after the listing of Doosan Robotics, and cash inflow from share sales.